Harrah's Entertainment has proposed a deal to merge its London Clubs International division with Gala Casinos. A business resulting from a merger between London Clubs and Gala Casinos would own 40 casinos in Britain, just one shy of Stanley Casinos, the country's largest casino operator.
Neither Harrah's nor Gala Casinos has revealed much to the public about the structure of such a deal or its chances of becoming a reality.
Only three months ago U.S.-based Harrah's approached Rank, operator of 32 casinos in Britain, about the possibility of a merger involving London Clubs. Harrah's proposed handing over London Clubs to Rank in exchange for 28 percent ownership of the enlarged Rank that would emerge from the deal.
It is not clear whether Harrah's would like to enter a similar arrangement with Gala Casinos, or even if it proposes to sell London Clubs flat out.
Harrah's acquired London Clubs for £300 million in 2006, anticipating that the deal would position it to take advantage of the United Kingdom's broad new gambling reform laws, but the British government has since scaled back its plans for casinos drastically, banned smoking in casinos and raised gaming duty. Last year Harrah's was taken private by its new owners, Apollo Management and TPG, in a $27.8 billion deal.
There is now speculation that the credit crunch in America has dampened ownership's efforts to syndicate its debt funding, and as a result they may wish to withdraw from their European expansion plans, which also include slow-going supercasino projects in Spain, Slovenia and Hungary.
Meanwhile, Malaysian gaming company Genting, owner of Stanley Casinos, has this week increased its stake in Rank Group from 10 percent to 11.03 percent, prompting speculation that it might seek to acquire Rank. There is speculation however that such an acquisition could rub competition authorities the wrong way.
Harrah's is owner of the World Series of Poker brand, which has been pursuing expansion in Europe and Asia, both online and on land.